TUNISIA

Photo by: Christian Lebon

Republic of Tunisia
Al-Jumhuriyah at-Tunisiyah

COUNTRY OVERVIEW

LOCATION AND SIZE.

Situated in northern Africa, Tunisia is bordered by Algeria on the west
and Libya on the southeast and by the Mediterranean Sea on the north,
where it has a coastline of 1,148 kilometers (713 miles). Tunisia has an
area of 163,610 square kilometers (63,169 square miles), making it
slightly larger than the state of Georgia. Its capital city of Tunis is
located on the country's northern coastline.

POPULATION.

Tunisia's population was estimated at 9,593,402 in 2000, compared
with 8,790,000 in the 1994 census. In 2000 the birth rate was 17.38
births per 1,000 population while the death rate was 4.98 deaths per
1,000 population. The population is expected to reach 11.2 million by
2015 with a projected annual population growth rate of 1.17 percent.

The Tunisian population is almost entirely of Arab descent (98 percent).
Europeans make up 1 percent of the population, and Jewish and other
ethnic groups make up the rest. Tunisia's population is young: 30
percent of the people are below the age of 14, and only 6 percent are
older than 65. The population is increasingly concentrated along the
eastern coast, with 43 percent either living in the capital city or on
the mid-eastern and northeastern coasts. There has been a large
population shift from the countryside to the cities due to increased job
opportunities in the urban areas; since 1984, 86 new towns have been
created.

Tunisia was the first Arab country to initiate nationwide birth-control
programs. Since the creation of the Department of Family Planning and
Population in 1966, the birth rate has fallen sharply, from 3 percent in
1966 to 1.17 percent in 2000. This drop is the result of an increase in
the standard of living, widespread access to education, and improved
health care. The number of women who are entering the
labor force
increased by 12 percent in 2000, and women's rights are actively
promoted.

INDUSTRY

OIL.

The production of oil in Tunisia began in 1966 when 2 main oil fields in
the southern part of the country were
tapped: El Borma and Ashtart. Over the years, many smaller oil fields
have been discovered, and by 2000 there were 28 known oil deposits. In
1999, just over 4 million tons of crude oil was produced, and it is
estimated that Tunisia has 55 million tons (400 million barrels) of
total oil reserves. In spite of the fact that Tunisia has fairly small
oil reserves compared with those of other countries in the region,
overseas companies still consider it worth the risk to prospect for oil
because the tax laws are favorable to even the smallest of discoveries.
In 1999 more than US$100 million was invested in exploration, with some
40 separate explorations being carried out in 2000. Petroleum products,
such as motor fuels, fuel oil, and liquefied petroleum, are not being
produced to full capacity because of the small size of the state-owned
refinery at Bizerte on the northern coast.

GAS.

Prior to 1966, gas was largely imported via the TransMediterranean
pipeline that transports Algerian gas to Italy. In that year, British
Gas invested US$600 million into the Miskar field in the Gulf of
Gabés, a site that produced 168 million cubic feet of gas per day
in 2000, a figure that was forecast to rise to 230 million in 2001.
Given plans by British Gas to invest an additional US$450 million in
2001, it is likely that this industry will continue to grow and become
increasingly important.

PHOSPHATES.

Tunisia is one of the world's largest producers of phosphates,
which are found mainly in mines in the southern part of the country.
Private-sector
activity is limited in this industry which is dominated by the
state-owned Compagnie des phosphates de Gafsa. A reduction in exports,
falling world gas prices, and rising labor costs led to financial
difficulties within the company in the mid-1990s, but it recovered with
the upturn in world prices. In 1999, about 8 million tons of phosphates
were produced. Tunisia also has reserves of other important minerals
including iron ore, lead, zinc, and sea salt. The production of iron ore
has been steadily declining since 1993 as reserves neared depletion.

MANUFACTURING.

Manufacturing accounts for 20 percent of Tunisia's GDP and
employs 20 percent of the country's labor force in 5 different
sectors: textiles, food processing, mechanical and electrical
industries, construction materials, and chemicals. Almost one-third of
the manufacturing sector is involved in the production of textiles, a
sector that grows an average of 6 percent a year. In 1999 the textile
industry accounted for 6.7 percent of the GDP. Some 1,800 firms are
involved in textile production, 700 of which are partly or totally owned
by foreign companies. Textile exports were valued at more than 3 billion
Tunisian dinars in 1999, a figure equal to 23 percent of total exports;
however, the sector is heavily dependent on Europe for its raw materials
and faces the challenge of increased competition from Asia.

Manufacturing overall continues to perform better than any other sector,
having grown an average of 5.2 percent a year since the early 1990s.
However, product quality is variable, and much of the labor force is
under-skilled. Manufacturing is dependent upon imports of raw materials,
spare parts, and
capital goods
and is challenged by increasing competition within its European export
markets. Tunisia signed an association agreement with the European Union
in 1995 which will lead to free trade in industrial goods with Europe by
2008. In 1996, the government initiated a project aimed at industrial
modernization.

SERVICES

TOURISM.

Employing 270,00 people, the tourism sector is of vital importance to
the Tunisian economy, contributing 6.2 percent to the GDP each year and
16 percent to foreign exchange earnings. In 1999 Tunisia welcomed
4,832,000 tourists, three-quarters of whom were French, German, Italian,
or British. In the wake of the Gulf War (1990-91) the number of tourists
fell sharply, and in 1995 there was a brief downturn due to an economic
decline in the European Union. The sector has been growing steadily
since that date. Important Tunisian tourist destinations include the
historic site of Carthage and the many locations in the desert where the
film
Star Wars
was shot.

The government has identified the need to attract tourists from Central
and Eastern Europe. Development has slowly started to expand beyond the
principal resort areas, and more moderately priced restaurants are
beginning to open. Tunisia is becoming increasingly popular as a
multi-seasonal destination because of its range of climactic conditions,
its popular skiing resorts, and its attractive beaches. It still remains
heavily dependent on the European market. Compared to the rest of north
Africa, revenue per tourist remains fairly low: US$340 compared with
US$468 in Morocco and US$850 in Egypt (all 1999 figures). This low
amount is mostly due to the lack of opportunities for tourists to spend
their money.

FINANCIAL SERVICES.

The financial-services industry is largely regulated by the Central Bank
of Tunisia. In 1999 there were 8 development banks, 2 merchant banks, 13
commercial banks, and 8
offshore banks
. The banking system continues to be highly inefficient, holding large
amounts of debt. In 2001 the sector is planning to open itself up to
foreign competition following agreements signed with the European Union
and the World Trade Organization.

The financial markets in Tunisia are composed of a semi-
privatized
stock exchange (partly owned by the government and partly owned by the
private sector) known as the Bourse des Valeurs Mobiliéres (BVM),
plus
various bond and stock/bond funds. The government opened the BVM in
1990 primarily to encourage foreign investment, but it has not succeeded
in its aim due to the overvaluation of stock, illiquidity
(unavailability of hard money), and a lack of investor confidence. In
response, the government privatized the managing company, BVM, and set
up a state-controlled watchdog, a central share depository, and a
guarantee fund. In 2001, there were 23 mutual funds, 87 investment
funds, and 25 risk capital funds totaling US$1.24 billion.